Introduction Toyota Motor (Toyota) is the leading auto manufacturers in the world.
The company also conducts business in the finance and other industries. The company sells its vehicles in more than 170 countries and regions worldwide. Toyota's primary markets are Japan, North America, Europe and Asia. It is headquartered in Toyota City, Japan and employs about 320,808 people. The company recorded revenues of JPY20,529,570 million ($205,295.7 million) during the financial year ended March 2009 (FY2009), a decrease of 21.9% compared to FY2008. This was primarily due to decreased vehicle unit sales, the unfavourable impact of fluctuations in foreign currency translation rates, and decreased parts sales during FY2009.The operating loss of the company was JPY461,011 million ($4,610.1 million) during FY2009, as compared to operating profit of JPY2,270,375 million ($22,703.8 million) in FY2008. The net loss was JPY436,937 million ($4,369.4 million) in FY2009, as compared to net profit of JPY1,717,879 million ($17,178.8 million) in FY2008. (Datamonitor, Toyota Motor Corporation, 5th Feb, 2010) The above information is collected to answer the task 1 which is asking to carry out a research on the Toyota s corporate strategy prior to 2009, discuss the current position of Toyota, macro environment analysis and the effect of Toyota s organisational culture on the current situation. Before going in to detail of the Toyota s corporate strategy, a brief of corporate strategy is defined below: Corporate strategy concerned with the overall scope of an organisation and how value will be added to the different parts (business units) of the organisation. This could include issues of geographical coverage, diversity of products/services or business units, and how resources are to be allocated between the different parts of the organisation. J. Gerry, S. Kevan, W. Richard, Exploring corporate strategy: Text and cases, 8th edition. Corporate strategy defines the set of business, locate the markets or industries in which the organisation competes and the how the resources will be distributed among these businesses. The corporate strategy formulates on the basis of the facts derived from the analysis of external environment and internal resources. Corporate strategy involves four kinds of initiatives:
Making the necessary moves to establish positions in different businesses and achieve an appropriate amount and kind of diversification. A key part of corporate strategy is making decisions on how many, what types, and which specific lines of business the company should be in. This may involve deciding to increase or decrease the amount and breadth of diversification. Initiating actions to boost the combined performance of the businesses the company has diversified into: This may involve vigorously pursuing rapid-growth strategies in the most promising Line of business (LOB), keeping the other core businesses healthy, initiating turnaround efforts in weak-performing LOB's with promise, and dropping LOB's that are no longer attractive or don't fit into the corporation's overall plans. It also may involve supplying financial, managerial, and other resources, or acquiring and/or merging other companies with an existing LOB.
with the increase number of employee and corporation s internal growth Toyota realized the necessity to bring out its ways of working in written available to all employee. However.y
Pursuing ways to capture valuable cross-business strategic fits and turn them into competitive advantages. Mitchell. the most prominent and the definitive mission of the Toyota is to "develop and provide innovative. 2006). (The Toyota Way in Sales and Marketing. operating facilities. Yoshio ishikaza. is to become the most successful and respected car company in each market around the world by offering customers the best purchasing and ownership experience. procurement leverage. distribution channels. Establishing investment priorities and moving more corporate resources into the most attractive LOB's. Toyota outlined number of principles and policies in order to meet the corporation objectives. especially transferring and sharing related technology. to create lifetime customers by adopting a customer-first strategy. and/or customers. 2006). Toyota published its Toyota ways in 2001 as a means of clarifying "the values and beliefs that all employees should embrace in order to carry out the Guiding Principles at Toyota. Objective and Strategies With a company like Toyota Motor Corporation which involves in many diverse projects and interests. in more beneficial manner and enhanced efficiency. objectives and policies correlate and support each other and keeping consistency throughout.
(Rex C." (Toyota Motor Corporation. its corporate philosophy. The vision. he says. set on the basis of this mission. He then sets two missions for every employee to materialize the vision. safe and outstanding high quality products and services that meet a wide variety of customers' demands to enrich the lives of people around the world" (Toyota Motor Corporation. TTWSM)
. and to become the sales and marketing radar for all of Toyota. being pursued at any one particular time. Following are the outline of some of the most prominent and defined Toyota Motor Corporation s objectives. Before the publication of the Toyota ways. Strategy Formulation. tells about the vision and the mission of Toyota. Ph.D. former president of Toyota US and now the senior advisor to the board of Toyota Corporation. there are numerous objectives and goals at different level. Mission On the top of all. 2005)
The Toyota Mission. objectives and business methodology simply passed on as an implicit knowledge. strategies and policies with the discussion on whether these different tasks.
several goals and objectives have been introduced time to time as the aim of the company in keeping with its beliefs and building on its prior sales and financial success. A range of in-house committees. innovation and expansion. The three main corporate goals are the following: 1.php)
. If a machine is not producing perfect goods. maintaining superior quality. To continue to introduce and produce products those fully cater the customer needs.
Strategy Toyota has developed and implemented several strategies in order to achieve the objectives consistent with the overall corporate goals. (Toyota Motor Corporation. these objectives have the essence of increasing sales and profit. 2006)
The unique Toyota management system was contributed by Taichi Onho.com/companies/toyota.Objectives To carry out the mission of Toyota Motor Corporation. who also developedthe Toyota Production System (TPS). Another example of this advice. 2006) Collectively. Thinking Manager. A system that emphasizes problem solving and preventative measures done by immediately flagging problems and sharing them with the appropriate individuals/departments. 2. To become an even more competitive global company. 3. To steadily increase corporate values as a top management priority. which Toyota developed as follows: 1. 2010-04-09
http://www. it is not 'working'. among many others. (Robert Heller. A unique management system focused on prompt decision making and speeding up operations. The main strategies." The Production System adhered to the Toyota corporate strategy of cutting waste.thinkingmanagers. listing specific advice such as: Cut down on the distance that things move throughout the plant. 2. representative of Toyota strategic management and its attitude towards its workforce is: Utilise the inherent talent of your workers. Onho summed up his theory behind the management of Toyota as. (Toyota Motor Corporation. "I feel strongly that the word 'work' refers to the production of perfect goods only. 3.
(Toyota Motor Corporation. The foundations of these endeavours are the Guiding Principles at Toyota and the CSR Policy: Contribution towards Sustainable Development. policies and philosophies by which all transactions take place in order to meet the corporate objectives must be followed on the basis of the above Guiding principles
CSR Policy: Contribution towards Sustainable Development CSR Policy: Contribution towards Sustainable Development (adopted in 2005 and revised in 2008) explains how Toyota adapts the Guiding Principles with regards to social responsibilities to stakeholders. Policies Since its foundation. Foster a corporate culture that enhances individual creativity and teamwork value. 6. Honour the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world. Toyota complies with local. TOYOTA MOTOR CORPORATION and their subsidiaries. Work with business partners in research and creation to achieve stable.Toyota introduced its pioneering set of strategies. has inspired the "lean production" system and been studied in business schools the world over. Toyota has continuously strived to contribute to the sustainable development of society and the Earth by providing high-quality and innovative products and services. national and international laws and regulations as well as the spirit thereof and conducts business operations with honesty and integrity. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. Toyota believe that management interacting with its stakeholders is of considerable importance. 5. Pursue growth in harmony with the global community through innovative management. which stresses continuous improvement and the role of each worker in the production process. long-term growth and mutual benefits. Annual report 2008) Toyota recognized that all the activities. while honouring mutual trust and respect between labour and management. and Toyota will endeavour to build and maintain sound relationships with stakeholders through open and fair
. 7. 2. 3. while keeping ourselves open to new partnerships. and methods that it has embraced since its foundation. Create and develop advanced technologies and provideoutstanding products and services that fulfil the needs of customers worldwide. 4. take initiative to contribute to harmonious and sustainable development of society and the earth through all business activities that carry out in each country and region. values. In order to contribute to sustainable development. Toyota Way . Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. 1. Toyota hopes to contribute to society through its corporate activities based on understanding and sharing of the Guiding Principles at Toyota. Guiding Principles at Toyota The Guiding Principles at Toyota (adopted in 1992 and revised in 1997) reflect the kind of company that Toyota seeks to be in light of the unique management philosophy. based on Guiding Principles.
Annual report. (H. the dealer second. a corporate customer came to the sales division and pressed kamiya. innovative and high quality products and services that cater a huge variety of customers demands. Kamiya didn t hesitate: the first person we think of is the customer. But the customer is said to have gone away satisfied. 2006) Customers are the first priority at Toyota corporation as their philosophy customer first reflects. Productive Press. (Toyota Motor Corporation. Even before the World War II. In order to put that philosophy into practice Toyota builds favourable relationships with all of its stakeholders. for Toyota s position on selling cars. and the manufacturer third. The substance of this declaration later became a Toyota slogan: the user comes first. The last person we think of is the manufacturer.communication. Toyota develops and provide safe.
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Emphasis on the customer The users comes first. Toyota expects business partners to support this initiative and act in accordance with it. the dealer second and the manufacturer third.
(Toyota Motor Corporation. and employees. local communities. who was then in charge of the division. Further. including shareholders. customers. its fundamental management philosophy is to remain a trusted corporate citizen in international society through open and fair business activities that honour the language and spirit of the law of every nation. Annual report 2008) Toyota Corporate Governance Toyota s top management priority is to steadily increase corporate value over the long term. Inside the mind of Toyota: management principles for enduring growth.
. The macro-environment influences on organisation. The PESTEL framework can be used to identify how future trends in the political. giving the U. The PESTEL framework categorises environmental influences into six main types: 1. Social 4. after bailing out the automaker with $49. This consist of broad environmental factors that impact to a greater or lesser extent on almost all organisations. Michigan-based Chrysler received $14.S. and worldwide. The PESTEL analysis provides a broad data from which to identify key drivers of change. amid reports of Toyota's vehicles accelerating rapidly. Iranian tension and Israel /Palestine hostility. 8th edition)
PESTEL analysis for Toyota 1. Technological 5. Political force Important factors y Unstable condition of the middle-east and the political instability including the Iraq war. owns 61% of Detroit-based GM.9 billion in aid. Economic 3. (John Hughes and Theo Francis February 23. The U. social. Potential impact on business
y Customer may give preference to purchase plug-in hybrid car to keep themselves independent on foreign oil and one that serves to bolster US independence while reducing the bargaining power in adversarial governments. the biggest U. a 10% stake. Environmental 6. technological. Political 2.
Upwards of 8 million cars have been recalled in the U. environmental and legal environments might impinge on organisations. Bloomberg)
The US government¶s stakes in GM and Chrysler may influence the investigation and discriminate against its direct competitor.S. economic.Macro environmental analysis The environment is what gives organisation their means of survival.S. 2010. The US government bring Toyota into trial over the issue which may effect on Toyota¶s brand image. Legal (Exploring corporate strategy. car company.3 billion.S.
has ignited the need for lower prices in order to liquidate product that is overstocked. Toyota will declare any cash dividends on shares in Japanese yen.S. Furthermore. pressure to continually lower prices to generate sales is resulting in significantly lower profit margins.
This has been elevated household incomes. In a number of countries. for the auto manufacturers. The issue of Excess Capacity
The issue of excess capacity. driven by supply concerns and increasing demand will serve to increase the attractiveness of vehicle options like plug in hybrids that are less dependent on gasoline. their own tastes can affect those of consumers in the host nation. However. not only from the specific ethnic group but from other consumers whose tastes have been affected by them.S.
. Potential impact on business y This will be reflected in changing demands for various goods. the ethnic mix of consumers is changing due to immigration and other factors. dollar amounts received on conversion of cash dividends.2. as ethnic groups immigrate to other countries. as described above. allowing for more frequent purchases of new vehicles. y Governmental tax increases and tax credits on gasoline will increase the desirability of plug in hybrids
Toyota may face more loss in terms of excess capacity which it is holding while there is already the issue of recall and the decline in overall sale revenue for the corporation. As a result. exchange rate fluctuations are likely to affect the market price of the American Depositary Shares (ADS) on the New York Stock Exchange (NYSE).
Global demand has exceeded global oil production. Exchange rate fluctuations will also affect the U. Economic forces Important factors y Steep increase in crude oil price.
Fluctuations in the exchange rate between the Japanese yen and the U. dollar. Due to this there will be a great price competition start among the manufacturer which will become another challenge for Toyota.
The result of an increased number of women working over the past decades. Potential impact on business y The price of gasoline. Socio-cultural force Important factors y The development of ethnic markets can be relevant. China and India growing at 810% annually have put a huge demand on oil in the global market keeping prices steady.
which may result in further downward price pressure and adversely affect Toyota s financial condition and results of operations. Technological force Important factors y Technological breakthroughs related to components and systems. the chief executive of Toyota Motor Europe. economic conditions in such markets are particularly important to Toyota. Los Angeles)
"We understand that the current situation is creating concerns and we deeply regret it.co. Toyota s production system and it s sets of rules that governs the use of resources. In 2006.bbc." said Tadashi Arashima. By focusing on developing US factories and supporting local communities it had managed to win the hearts and minds of normally protectionist American car buyer. (M. It had built up a reputation for high quality and reliability. BBC New. Rajesh. claiming the Japanese carmaker sold hundreds of thousands of vehicles that it knew had defects. Each of the markets in which Toyota competes has been subject to considerable volatility in demand. Toyota was voted the most respected car company in USA. California sues Toyota for faults.stm )
The impact of Toyota s culture on the current situation Prior to 2009 Toyota has done a great job of expanding internationally.
The worldwide automotive industry is highly volatile. It had a 17. Demand may also be affected by factors directly impacting vehicle price or the cost of purchasing and operating vehicles such as sales and financing incentives.4% share of the US car market and was heading towards becoming the single largest car company in the US. As Toyota s revenues are derived from sales in markets worldwide. Demand for vehicles depends to a large extent on general. Potential impact on business y Development of leading-edge components and systems ahead of competitors. (http://news. Toyota has successfully competes in the market and established its world-wide presence. The Lexus brand had a strong image in the luxury sector. import regulation and other taxes). With its Prius model it had effectively captured a large part of the green market. Volatility in demand may lead to lower vehicle unit sales and increased inventory. (Toyota Motor Corporation.
.uk/1/hi/business/8487984.4. cost of fuel and governmental regulations (including tariffs. The fundamental reason for Toyota s success lies in the corporate philosophy. social. Annual Report 2008)
The current situation of Toyota Prosecutors in California are suing Toyota. prices of raw materials and parts and components. political and economic conditions in a given market and the introduction of new vehicles and technologies.
Time magazine suggests the culture had everything to do with it. Toyota's top management wasn't listening. When Toyota opened its Georgetown. but it isn't as easy . Compared with the nimbleness seen in Silicon Valley.html) Despite a global company Toyota is still a very much Japanese company. Some analysts criticise that the Toyota Production System (TPS) and lean does not work. The Toyota Way. That kind of hand-holding may still be possible.Despite having such a power full production system.com/time/business/article/0.1963595-2." he says. When weak signals started coming out in 2002. ( http://www.
. Toyota s top leadership dose not included US executives. a marketing professor at Waseda University's business school in Tokyo. parts of its business culture had become sclerotic. "Toyota is famous for having an arrogant culture. They're so used to dealing with successes that when they have a problem. Analysts describe a Toyota management team that had fallen in love with itself and become too insular to properly handle something like the current crisis. they're not sure how to respond. Toyota has an operating model for their business and everyone in the company knows about it. Toyota developed Toyota Production System and it was working so well that they did not think about it with respect to changing environment and strategy. was over. Jeffrey Kingston.. "Rapid expansion puts enormous pressure on any company's ability to transmit know -how and technology. the things began to go wrong. 'The reaction to [the situation] is a very Japanese thing. Japan's manufacturers and their systems began to be seen as inflexible. says Toyota's managers don't understand how sensitive the American public is to auto-safety issues. Ky. plant in 1988.. which many companies fosters to develops their business and production plan. hundreds of work-team specialists and other experts were transplanted from Japan for several years to make sure the new plant fully absorbed the Toyota way. Quality and culture are the fundamental growth factor for Toyota and ignoring them specially when not keeping Toyota s culture in focus. "Their focus on the customer has been nonexistent. especially over long distances and across national cultures. the heroic stage of Japan Inc. still sticking to its same culture which lead the company in the current position. too removed from a changing global economy to adapt. The company simply got too big. The lean and TPS does work in Toyota since many years which make it the world s best car seller company. director of Asian studies at Temple University Japan. Toyota is facing the major disaster of its life time. They believe that they have all the solution for the future problem.' says Kenneth Grossberg. By then. As long as they stick with their plan Toyota managed a very strong quality system. The problem in the Toyota arises when it did not align with its way.8599.time.00..
The current situation of the Toyota could cost billions of dollars to the corporation. There is the need to emphasise the strong political will to urgently combat this climate change. Toyota has recalled millions of vehicles due to the problem with its braking and acceleration. To provide the safer transportation and the quality product to the customers Right First Time. 5. To penetrate in the global automotive industry and take the company s growth at a higher rate.
Reasons for the chosen objectives The auto industry is going through the tremendous change because of the many reasons. Laws and government regulations are also changing continuously and rapidly. Toyota has experiencing a challenging era since it comes into creation.
opportunities. and take advantage of changing consumer buying habits. In the current situation Toyota needs a sense of urgency in revising a strategic plan through which it enables itself to tackle with the changing global competition. To ensure reasonable ROI and to maintain liquidity by managing the assets and human capital efficiently. GM needs to change
. New Mission Statement for Toyota To meet the customers expectations through quality. leaving the brand as a symbol of quality in consumers mind and lead the automotive industry through innovation and alternative fuelled vehicles. The middle-east war is responsible to the rise in the fuel prices and global warming and changing environmental regulations. In the US the company has been forced to recall 6million vehicles. 2. Almost all the regulations are concerning to the environment. 4. economy and environment within the automotive industry. New Vision Statement for Toyota To make the world a global family through quality products.Task 2: Draft a new Vision and Mission statement for Toyota. 3. 2009 that The current climate is one of the greatest challenges of this age. This is the time when Toyota must reengineer its strategy and take these environmental and other conditions as opportunities. It was decided in the Copenhagen Climate Change Summit. delivery.
Task 3 Proposed top 5 objectives for Toyota based on the vision and mission are as follows: 1. Toyota is one of the major car manufacturing industry which needs plans its corporate strategy carefully and thus the path to accomplish its goals. To contribute in employment globally and play a leading role in manufacturing low carbon vehicles. To involve the customers interaction for continuous improvement. cost and after sales services and will regain the lost market share through aggressive strategic marketing in a smarter way and innovating the vehicles for the changing global market.
Financial perspective. quality. from a dull. It is composed of four categories. 4. green. poor quality. Norton in 1992.
Internal business Perspective
Innovation and Learning Perspective
It is the measure of the targets within the organization. 2.
.consumer perception of the company. Evaluation from the customers¶ perspective helps in improving the quality. and create innovative. Listen to what consumers are saying directly and indirectly about GM¶s current products. quality. Measures for this perspective are information system availability and the employee satisfaction. The considered measures of evaluation are the number of new customers. 3. Innovation and learning perspective. 1. cost and position in market. lead time and response time. To do this GM must portr ay an image that states that GM values what the consumer wants and what the environment needs. vehicles to innovative.
Task 3.3: How will success against the objectives defined in 3.
Customer Perspective How customer see the business. vehicles that turn consumers into customer s.1 be measured.
. Customer perspective. It strives to meet the shareholders and customers¶ expectations by excellent business internal processes. Internal business perspective. This is known as the Balanced Scorecard and can be used for strategy and policy implementation and performance measurement. customer satisfaction and retention. It shows the ability of managed resources of the business and ability of change and availability of infrastructure for achievement of the objectives of the other three. At the same time provide GM stakeholders pride and financial incentives to remain with GM. acquisition and market share. is based on the suggestions determined by the Robert S.
It is the measure of the ability of continued growth and innovation. measures for evaluation of the proposed objectives. The measures of evaluation are cost. and environmentally friendly company. The method of this study. Kaplan and David P.